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TORONTO—Two Canadian mid-sized gold companies say they have a US$1.5-billion friendly deal to merge, creating a business with operating mines in Ontario and Mexico and a minority stake in a spinoff company working on a project in British Columbia.

Shareholders of Alamos Gold Inc. and AuRico Gold Inc. would each own half of a new company that owns the Young-Davidson mine in Ontario and the Mulatos mine in Mexico, among other assets.

The merged company would also own about five per cent of another new company, to be named AuRico Metals, which will have about US$20 million in cash and a number of mining assets including the Kemess project in northern British Columbia.

The chief executives of Alamos and AuRico would remain in senior positions.

They say the deal will create a more diversified company operating in safe jurisdictions and provide their shareholders with an opportunity for significant growth.

“We are very pleased to bring this transaction forward to the benefit of both sets of shareholders,” said Alamos CEO John McCluskey, who would be chief executive of the combined company.

AuRico chief executive Scott Perry, who will head the new AuRico Metals and be a director on the main company’s board, said shareholders will benefit from a larger cash flow and potential to unlock value in the “highly prospective” Kemess project.

The transaction will require approval of two-thirds of shareholder votes from each Toronto-based company.

Alamos would receive US$28.4 million and AuRico would receive US$37.5 million in certain circumstances if the deal isn’t completed.

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